Why Liberals Are Livid Over Emerging Fiscal Deal

Van Jones, Special Advisor for Green Jobs, Enterprise and Innovation at the White House Council on Environmental Quality, takes questions from Facebook and the White House website about the Presidents unfolding vision for a clean energy economy. Photo: Public Domain

San Francisco, CA — A week that began with liberal PAC, MoveOn.Org, opposing the emerging Obama/Boehner fiscal deal, has the left policy echo chamber ratcheting-up dissent.

The proposed deal would cut Social Security and extend Bush Tax Cuts for households at $400,000. A liberal not-for-profit organization, Rebuild the Dream (also known as The American Dream Movement), is dedicating December 19 to Airstrike. A collaboration of artists and musicians around the country, Artstrike focuses on producing works intended to awaken Americans and encourage Congress to set a new course on pressing national challenges. Artstrike has linkages to Rebuild the Dream’s stated purpose as “leading the way” to a more fair and more equitable economy.

The group, formed as a center-left counter to the Tea-Party Movement, is particularly disappointed by the emerging fiscal deal being forged in Washington. In an Artstrike email circulated today, Rebuild the Dream President and Co-Founder, Van Jones, and Jones’ team revealed:

Today is ARTSTRIKE, and it couldn’t come at a more urgent moment. Reports indicate President Obama and Speaker Boehner are still discussing a deal that would slash Social Security, cut veterans benefits, and raise taxes on the poor and middle class to pay down a deficit created by the Bush wars, Bush tax cuts, and Bush economic collapse…. Rebuild the Dream has joined forces with culture-makers to call out the “fiscal bluff” and take a stand against the lies and cuts that would hurt our communities and families.

The Artstrike email comes as other liberal groups are likewise expressing concerns over recent directions in the fiscal deal. Writers Nancy Altman and Eric Kingson at The Huffington Post provided a thorough analysis of the proposed cuts in Social Security. Specifically, Altman and Kingson argue that changes in the Cost of Living Adjustment [COLA] calculation constitutes a cut; one that President Barack Obama and Speaker John Boehner committed to avoid. Cuts that the American public overwhelmingly rejects. Says Rebuild the Dream:

President Barack Obama and Speaker John Beohner

Most, including President Obama and Speaker Boehner, have acknowledged that Social Security has not and cannot contribute a penny to the federal debt. Nearly all are on record as promising that they will never, ever cut the benefits of today’s seniors and people with disabilities. They’ve seen those pesky polls showing that the American people, Republicans, Independents and Democrats, alike, strongly oppose benefit cuts. Constituents understand that playing around with the way COLAs are calculated is a benefit cut, pure and simple.

The essential grievance evolves around the proposed use of Chained CPI in COLAs, a drastic $112 billion budget cut over ten years that will cost seniors an average of $28,600.

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Chained CPI in a Nutshell

Last year, President Barack Obama floated the idea of changing the Social Security COLA from the traditional Consumer Price Index [CPI] to an alternative “Chained CPI”. The former is based on economic theory that consumers make lower-priced choices in products and services when prices rise. For instance, men who would ordinarily buy tailored suits would switch to off-the-rack suits during inflationary periods. Chained CPI attempts to account for consumer reactions to rising prices. And this alternative index, while not understood by the general public, is taking root in both political parties and is now the centerpiece of ongoing budget discussions. Using Chained CPI adjusts inflation estimates downward for purposes of calculating Social Security COLAs. This translates into lower payments to Social Security recipients. Ultimately, Chained CPI is a way to cut benefits without explicitly calling the revised COLA formula a “cut”. [/important]

The Tax Policy Center [TPC] estimates Obama’s Chained CPI basis for COLAs would be most injurious to the middle class. TPC calculations show that wage-earners in the $30,000-$40,000 bracket would see the largest percentage decline in after-tax income. The change would result in a 0.2 percent income surtax (i.e., after-tax income decrease), with 76.9 percent of the share of tax increases shouldered by income earners $200,000 and less.[pullquote align=”right” textalign=”right” width=”50%”]“I think there’s a way for us to make adjustments on the Social Security tax that would be fairer than the system that we use right now.” President Obama

Alpha, IL Townhall Meeing August 17, 2011[/pullquote]

The implications of using Chained CPI points to why many refer to the fiscal cliff as a manufactured scheme. Timing of the supposed crisis followed the elections, with policymakers knowing the looming choices would not settle well with voters. This is consistent with another set of changes to healthcare insurance that will kick-in January 2013.

To add injury to this direction, the timing of the vote could take place over the holidays when Americans are pre-occupied with festivities, family gatherings, and other traditions.